Books

Still a bumpy ride for Indian startups

Vinay Kamath | Updated on January 12, 2018 Published on June 11, 2017

Title: Boom Country: The New Wave of Indian EnterpriseAuthor: Alan RoslingPublisher: Hachette IndiaPrice: ₹599

Alan Rosling catalogues the entrepreneurial dream and asks if the current upsurge can sustain and transform the country



Alan Rosling is uniquely positioned to have authored Boom Country? The New Wave of Indian Enterprise. A Britisher educated at Cambridge and at Harvard Business School in the US, and who later worked in multinational outfits in India, you could say it’s an outsider’s view in. But, as the first foreigner to be on the board of Tata Sons and an entrepreneur himself, co-founding a solar energy company and setting up plants in India’s hinterland, it could well be an insider’s view of entrepreneurship in the country.

Rosling’s book is a compelling read for anyone wanting to make sense of the entrepreneurial ecosystem in India. It has plenty of personal anecdotes, stories, background on contemporary economy, analysis, perspectives of entrepreneurs, venture capitalists and investors across the spectrum, and has takeaways for all.

Wide spectrum

The author has done a lot of legwork for his book, interviewing over 100 entrepreneurs, investors and observers of the entrepreneurial ecosystem. While stories about IT and e-commerce entrepreneurs abound, given that they dominate the entrepreneurial landscape, Rosling also narrates stories of people in manufacturing, dairy, a chai chain and of a company that increases energy efficiency and lowers the cost of carbon capture.

The comment by Aniruddha Sharma of Carbon Clean Solutions to Rosling exemplifies the proclivities of the investment community in India. As Sharma said: “India is a country where nobody invests in a tech company. If you open a web site which is selling used shirts, you will raise a million today or tomorrow. If you say ‘I am going to save the world, here is the technology, and we actually won three prominent awards’, no one is interested!” Sharma and his partner, Prateek Bumb, moved their company from India to the UK after winning a global grant of 3.6 million pounds in 2012.

Sharma’s would be a stray case as VCs and angel investors have invested millions in a host of other sectors. Rosling talks to several of these entrepreneurs.

Rosling’s own entrepreneurial ambitions were stalled when he met Ratan Tata to discuss his venture. He had just finished a five-year stint as Country Chairman of the Jardine Matheson group, which did business with the Tata group. “That’s not a good idea,” Tata told a surprised Rosling. Instead, Tata suggested that he join the Tatas; which he did, for five years on the Tata Sons’ board.

Those many waves

The first part of the book sets the economic context of India; then Rosling talks about what he terms ‘Manmohan’s children’, the entrepreneurs who rode the first wave of liberalisation when Narasimha Rao became Prime Minister in the early 1990s, with Manmohan Singh as his finance minister.

Later, the book discusses those who became entrepreneurs post- 2000. The older group demonstrates greater struggle and also had much less access to risk capital. “Many of the newer stories I heard are more purposeful, better funded and based more on a pure idea,” says the author. Another phenomenon, he notes, of the tech-driven entrepreneurs of this century is most of them are US-educated, exposed to the energy and entrepreneurial ecosystem of that country, worked in multinationals and returned to become entrepreneurs in their homeland.

While Rosling does catalogue success stories of many well-known entrepreneurs, it’s not paeans right through. Despite its teeming population of entrepreneurs, until recently at least, India has been short of the high-aspiration entrepreneurs who create the ‘gazelles’ that research indicates generate job growth.

Quoting economist Maria Minniti, Rosling says that as income per capita increases and formal job opportunities develop, in middle-income countries, the proportion of the population which is self-employed tends to be lower. Then, beyond a point, self-employment increases again as the economy becomes more sophisticated and wealthier. The reasons for this poor ‘quality’ of entrepreneurship in transition economies are many, as Minniti says: a lack of formal market-supporting institutions, institutional weaknesses, including issues with the rule of law and corruption, poor access to finance and attitudinal issues such as fear of failure. “Much of that, if translated from academic speak, would ring true for India,” says Rosling.

India fares poorly in the global entrepreneurship index despite its teeming millions of entrepreneurs and its exciting new cult of the young tech entrepreneur. In the 2016 index, India was ranked 98 out of 132 countries. However, slice this data and look at the tech-urban phenomenon and India ranks right up there as having a vibrant tech start-up eco-system. As Rosling argues, there are many Indias in which contradictory things can co-exist and be equally true at the same time.

Bangalore to Bharat

In the modern, youthful, educated, connected India of Bangalore, Gurgaon and Powai, there is clearly a tsunami of ambitions, he says. At the same time, in more traditional and rural Bharat, the old thinking, challenges and constraints persist.

Rosling quotes Ratan Tata and the Tata group often, not surprising given his many years with the group. Ratan Tata, he says, was surprised by the speed with which people adopted the smartphone, enabling them to become customers of new-era ventures such as Bharti, MakeMyTrip and Paytm.

“The same connectivity is spreading a new ambition among young people, just as Peter Drucker saw in the US 34 years ago,” says the author. He quotes Anand Mahindra: “There is a much larger, disproportionate hunger among young Indians to succeed because of the sheer number of educated people who are savvy about new technology.” Digital technologies will be the key to transform India, he says. It offers opportunities to entrepreneurs to solve challenges facing traditional services like retail or education. Over a third of the 92 entrepreneurs Rosling interviews are in the digital space, though all of them are applying digital tech in some form or other in their businesses.

Rosling intersperses his chapters with short profiles of a few entrepreneurs. Many unknown anecdotes and tales abound. Like the one of Paytm’s Vijay Shekhar Sharma, hitting a nadir in 2004 and having to scrounge off friends to eat. He often went to bed after having had just a Coke and Britannia Bourbon biscuits! Now, he offers to drop Rosling home in a sleek BMW! Sharma tells the author that his prospective father-in-law actually audited his financial position that year and he was rejected as a suitable boy and the marriage took place a year later, when his situation improved.

Or, the nugget about Sunil Mittal who, in the 1970s, when completely out of funds in Ludhiana, went to Hero’s Brijmohan Munjal to borrow. Munjal was not happy but Mittal said he was desperate and Munjal finally agreed to clear a few bills. “As I turned back to the door of his shabby cabin, he said, ‘Beta, don’t make this a habit!’ That incident changed my life because from that day on I’ve never let my finances get the better of me. Never,” says Mittal.

Rosling winds up with three distilled recommendations for entrepreneurs and investors. For the former: Do it when it feels right; persistence pays; and follow a path less travelled but don’t travel alone. For investors: Be different, be disciplined, know more about less and contribute more than just money. Pithy but potent advice.

Published on June 11, 2017
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